EXCO Resources (XCO) Stock Gains on Rising Oil Prices

NEW YORK (TheStreet) -- EXCO Resources (XCO) stock is up by 7.41% to $1.16 in mid-afternoon trading on Thursday, as oil prices surge today.

Oil prices increased after Baker Hughes' (BHI)weekly rig count showed that U.S. crude rigs fell by 2 this week to 536 rigs total, Reuters reports. Additionally, prices were helped after several oil companies in the North Sea had to end production due to adverse weather conditions, according to Reuters.

However, oil prices are expected to remain pressured next year due to the global oversupply of oil. Goldman Sachs projected that prices may need to reach $20 per barrel in order to re-balance the oversupplied oil market, Reuters reports.

"The hope for a rebalancing in 2016 continues to suffer serious setbacks," the firm said in a note, according to Reuters.

Crude oil (WTI) is up 2.57% to $37.58 per barrel and Brent oil is up 3.57% to $37.76 per barrel, according to the CNBC.com index.

Based in Dallas, EXCO is an oil and natural gas company engaged in the exploration, exploitation, acquisition, development and production of onshore United States oil and natural gas properties.

Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:

We rate EXCO RESOURCES INC as a Sell with a ratings score of E+. This is based on a variety of negative investment measures, which should drive this stock to significantly underperform the majority of stocks that we rate. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 952.8% when compared to the same quarter one year ago, falling from $41.57 million to -$354.52 million.

Net operating cash flow has significantly decreased to $18.65 million or 79.33% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 49.38%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 966.66% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.

EXCO RESOURCES INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, EXCO RESOURCES INC increased its bottom line by earning $0.44 versus $0.11 in the prior year. For the next year, the market is expecting a contraction of 150.0% in earnings (-$0.22 versus $0.44).

XCO, with its decline in revenue, slightly underperformed the industry average of 36.8%. Since the same quarter one year prior, revenues fell by 44.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.